Contract of insurance—Nature of contract

Supreme Court Lord Neuberger P, Lady Hale, Lord Mance, Lord Clarke and Lord Sumption SCJJ 13 Feb 2013

First Council Directive (EEC) 73/239 did not prevent member states from imposing wider regulations on insurance contracts including contracts for benefits in kind rather than pecuniary benefits.

Lesley Anderson QC and Lloyd Tamlyn (instructed by Brabners Chaffe Street LLP) for the appellants. Jonathan Crow QC and Charlotte Cooke (instructed by the Financial Services Authority Legal Department) for the Financial Services Authority.

The appellants were engaged in selling and performing extended warranty contracts. Under the contracts, in consideration of a periodic payment, they contracted to repair or replace satellite television dishes, digital boxes and associated equipment in the event of breakdown, malfunction or, in certain cases, physical damage. Although not accepted by the appellants, the litigation proceeded on the basis that at common law the contracts were contracts of insurance.